The narratives generated in the past still control how we think, how we behave, and we often forget that these were invented and propagated many centuries ago by people who benefited from them. Only in this way can we understand that not long ago women were not allowed to study, or if we go further back, we can recall when the colonizers of America made the locals believe that if they did not obey, they would anger their God, who was stronger than theirs. This happened in Jamaica in 1504[213] when Christopher Columbus, on his fourth visit to the New World, after problems with his caravels, was forced to stay on the island for a long time until he and his crew could be evacuated by a new mission. At first, the local community, known as the Arawak, helped the European explorers with shelter and food, but after weeks and months on the island, tensions began to escalate due to the scarcity of available food. Facing mounting tension, Columbus took advantage of his scientific knowledge and a copy he had of Regiomontanus’s almanac, a German mathematician and astronomer, to tell the leader of the Arawak community that due to the lack of cooperation from his people, the Christian God was angry and would make the Moon disappear three days after that conversation. It turns out that the almanac made by Regiomontanus was considered mandatory material for any navigator, as it provided detailed information about the sun, moon, stars, constellations, and planets. After studying it, Columbus knew that a lunar eclipse would occur on February 29, 1504. To the locals’ surprise, the eclipse happened, and the reddish color of the Moon, which seemed covered in blood, ignited the community’s desperation, and they immediately agreed to take care of the colonists until they were rescued by another caravel on June 29 of the same year. Morally questionable, but from a negotiating standpoint, it was a masterful move where scientific knowledge was used to deceive and frighten a specific group.
Today, the world lacks a common narrative describing the opportunities and threats of the Fourth Industrial Revolution, driven by AI. Without a common narrative, it will be very difficult to govern an already battered society in an orderly manner. Earlier, we referred to what some authors understand as the end of history. If we merely look at the available economic systems, we find two competing models today. The first is Shareholder capitalism, predominant in the United States and the Western Hemisphere, and on the other hand, there is State capitalism, mainly referenced by China, although to a greater or lesser extent, it has also been applied by many other developing countries, and to a large extent also applied by the United States, although they do not label it as such.
While they start from different pillars, both models have made great contributions to the economic progress of countries. However, if there is something both models share, it is the proliferation of environmental and social problems. Inequities within countries have increased, generating social tension. If we add to this an imminent environmental crisis, the alarms are clear. We need a new social contract. We need a new way of organizing and generating value. The solution to a problem of such magnitude cannot rely on a quick response.
On November 3, at 9:45 PM, in 2018, I received an email notifying me that, after an application and interview process, I had been accepted to join an organization of young leaders. It was called Global Shapers Buenos Aires, and it was part of the Global Shapers Community, an initiative of the World Economic Forum. This global community’s mission is to empower young people to help them take a leading role in shaping local, regional, and global public agendas. Four days later, on November 7, 2018, Florencia Jeifetz, who then served as the General Director of the organization in Buenos Aires, gave us an induction talk to the network. In that presentation, she explained why Klaus Schwab, the founder of the World Economic Forum, had decided to promote this initiative. Amid so many slides, and before we decided to order some pizzas, I noticed that the concept of stakeholder appeared repeatedly. That was my first encounter with the concept of stakeholder capitalism, of which Schwab is one of the greatest advocates and promoters.
The central premise of stakeholder capitalism is that all interests of those actors who are part of the economy and society must be considered. This means that companies should no longer focus their efforts on short-term profits to show immediate results to their shareholders. Now they are accountable to all actors in global society. For this to be possible, governments, civil society, and international institutions play a fundamental role in ensuring equal opportunities and fair redistribution to all stakeholders, thus ensuring an inclusive system where no group is left behind.
In shareholder capitalism, the interests of one group, precisely the shareholders, dominate over the interests of others. This exacerbates the idea that the only reason companies exist is to generate and increase their profits. This is false and disconnects them from the real economy, where the interests of other actors or stakeholders must be considered with equal importance. We are referring, of course, to the companies’ employees, their suppliers, the communities where they are located, their local governments, and the well-being of our environment for current and future generations.
If you are reading this, you are likely Western and already tired of hearing about the benefits of democracy and the free market, so to save us some pages, let’s talk about China. This country, which most of the world still labels as communist, gets 60% of its GDP from private investments. Even so, its main actor or stakeholder is the State. The Chinese State, with its enormous power, is able to direct the distribution of opportunities and available resources, being able to intervene in any industry, thus controlling the entire economy. There, the heads of state decide what is a priority. Education? Scientific research? Housing construction? Creation of critical infrastructure? Security? Health? Whatever they decide, the chosen option will receive an immense injection of capital controlled by people expecting good and fast results. This has been the case, and it is the case in many other countries like Brazil or Singapore. In fact, if we delve deeper, this has been the case, at times more strongly than others, in all countries that have set their sights on private interests. Without its existence, it is likely that many of the advances we have seen in developing countries would not have happened in any other way. However, I am not praising state capitalism for no reason. It also has marked weaknesses, such as corruption, which is a latent threat to a system with hegemonic central power. There are plenty of examples of countries where certain patterns seem to favor specific companies of friends of public officials when it comes to distributing state contracts. Sometimes, these states also coerce the independence of the judiciary, and the application of the law becomes arbitrary. Moreover, in a system where power is so monopolized and has the ability to direct private interests, a misreading or analysis by state leaders will put large natural, human, and capital resources at risk. In the end, state capitalism, or crony capitalism, ends up resembling shareholder capitalism, as in both, the interest of one actor dominates over the interests of the rest of society.
Now, if we analyze the foundations of stakeholder capitalism, it does not stray far from the traditional definition of capitalism, where individuals and private companies make up the bulk of the economy. It is necessary for both actors to be able to express and innovate freely to bring ethical solutions to the problems we face as a society. However, for this to happen, proper alignment of objectives is necessary, and one actor cannot be allowed to take advantage of others’ efforts. The magic of the system lies in the idea that anyone with an interest in the economy has the right to participate and influence decision-making. The system’s objectives are no longer solely the short-term profit of shareholders, but the health and wealth of our societies, as well as that of the planet and future generations. This is the system we must implement, and no, it is not new at all.
After World War II, many Scandinavian countries understood that it was not possible for a single individual or company to do well if the macro economy did not work for the rest of society. Thus, local companies in Scandinavian countries began to forge closer relationships with local education and health systems, for which coordinated and collaborative work with local government authorities became a reality, helping to align goals and interests for the common good. The Netherlands, Sweden, Denmark, Finland, Belgium, and Germany are examples of this. Not the United States. Not China either. This is the system we must implement for the future.
It is time for stakeholder capitalism to shine again, but to do so, we must understand the changes in the system’s dimensions. We cannot expect to return to this type of capitalism and expect everything to work as it did in Scandinavian countries from the post-war period to the 1970s. Until that time, companies revolved around the interests within their national borders, and that cannot be the case in a globalized economy. It was precisely with the globalization of companies that they began to focus exclusively on their shareholders’ interests. This is what we need to reverse. The new capitalism must ensure the prosperity of society in a context marked by an alarming climate crisis and the ever-present threat of labor automation, now with AI and not just robotics. Our field of action is now global. Both the planet and its inhabitants must become the main stakeholders, and they must exercise some control over the other actors. We cannot forget that the decisions made by one country can affect the food security of another or exacerbate its climate crises. If we fail to understand this, sooner or later, we will end up hurting ourselves. Unions, NGOs, educational centers, religious groups, sports clubs, and cultural associations are not new actors in society, but the role each of them plays is about to be revalued. The same will happen in the private world. We can no longer afford to only listen to large companies, so the views of representatives of SMEs or self-employed workers, who represent an increasingly large group in society, will be revalued. But that’s not all; institutions themselves must change internally. Let’s not forget that leadership positions still tend to be quite monotonous in terms of gender, diversity, and age composition, while numerous studies show that diverse teams achieve better results.
My greatest concern is that those who make decisions that regulate our present lives and the future course of them are often blinded by the demands of the immediate agenda and forget to develop a strategic plan to harness the positive forces that the technological revolution will unleash, mitigating and minimizing its unwanted effects. After all, Schwab himself declared in 2019 that people are rebelling against economic elites because they believe these elites have betrayed them and have undermined their efforts to keep global warming limited to 1.5º C[214]. Are they wrong?
[213] Rao, J. (2014, October 12). How a Total Lunar Eclipse Saved Christopher Columbus. Space. Retrieved February 14, 2023, from https://www.space.com/27412-christopher-columbus-lunar-eclipse.html.
[214] Cann, O. (2019). Davos 2020: World Economic Forum announces the theme. World Economic Forum. Retrieved April 19, 2021, from https://www.weforum.org/agenda/2019/10/davos-2020-wef-world-economic-forum-theme.